George Osborne says any further eurozone integration should not damage interests of non-euro members

EmbedFeedGeorge Osborne says any further eurozone integration should not damage interests of non-euro membersIBTimes UK

In a strong message to the European Union and in a bid to protect London as a major financial centre, UK's Chancellor George Osborne is set to spell out Britain's demands for a renegotiated settlement with the EU when he meets his counterpart Wolfgang Schauble in Germany. This could be the start of details slowly emerging on what exactly Prime Minister David Cameron will be seeking as part of the UK's referendum on whether to remain a member or leave the EU.

The stark lack of specifics of what the UK wants in a renegotiated EU deal has left both EU officials and leaders of member states frustrated. Even European Commission president Jean-Claude Juncker noted that little headway has been made so far, saying: "To tango it takes two. And so we have to dance and our British friends have to dance."

Osborne's meeting with Schauble is seen as important as any changes to the EU will need the support of Germany, observers say. He met Schauble and the vice-chancellor Sigmar Gabriel on Monday evening (2 November) .

While in Germany, Osborne is expected to detail two of the four goals that the government is seeking in the EU reform. The first covers a clear end to the UK's role in a closer union.

"Remain or leave, is the question our democracy has demanded we put because, quite frankly, the British people do not want to be part of an ever-closer union. We want Britain to remain in a reformed European Union, but it needs to be a European Union that works better for all the citizens of Europe - and works better for Britain too. It needs to be a Europe where we are not part of that ever closer union you are more comfortable with, " he will say.

"In the UK, where this is widely interpreted as a commitment to ever closer political integration, that concept is now supported by a tiny proportion of voters. I believe it is this that is the cause of some of the strains between Britain and our European partners. Ever closer union is not right for us any longer," he will add.

He will also warn that any moves to integrate further within the eurozone should "not damage the interests of non-euro members." That is not all, Britain is also seeking protection for its businesses and the continued use of the pound, saying that the EU must accept that the single market has more than one currency and that it "should not discriminate against any business on the basis of the currency of the country in which they reside."

"What we seek are principles embedded in EU law and binding on EU institutions that safeguard the operation of the union for all 28 member states. The principles must support the integrity of the European single market," Osborne will say.

There are concerns that Germany may use Britain's reluctance to join the eurozone and for a more integrated bloc, to establish Frankfurt as a major rival to the City of London. The current 19 eurozone countries can form a caucus within the wider EU and act as a bloc in deciding single market laws, pushing through changes under the Lisbon treaty voting rules that recently took effect.

As more countries outside the eurozone join the bloc, there are real fears that the UK may be marginalised when important decisions are taken by the rest of the EU. And the reality is that any decision taken at the eurozone level will have an impact on the UK economy.

Osborne is also expected to push for Britain's continued right to participate in aspects of financial integration with the EU although the UK will continue to remain outside the eurozone, "There will be cases where non-euro member want to participate in developments like the banking union. But the participation must be voluntary, and never compulsory. We must never let taxpayers in countries that are not in the euro bear the cost for supporting countries in the eurozone," Osborne will say.

So how will such a proposal work? The Centre for European Reform thinktank has suggested that a new treaty article which includes new procedures to ensure greater transparency in discussions of the euro group so that the non-euro country which believes that an EU law harms the market may ask the European council for a review.

The Guardian noted that the UK has already vetoed plans to foot part of the bill for the Greek bailout, opting out of obligations imposed by eurozone on the UK which had no direct involvement in the bailout decisions. It highlighted the system used for the European banking union where non-euro countries could veto decisions being taken by those within the eurozone.